Payday loans are an expensive way to borrow money. Legally called 'small amount credit contracts', they are also known as ‘fast loans’ because they are small loans which can be approved within minutes of applying, and are expected to be paid back within a short period. These loans typically have higher fees and interest rates than longer-term bank loans.

Payday lenders are not as regulated as banking institutions in Australia. For instance, payday lenders do not legally have to tell you the annualised loan interest, making it harder to compare the true cost of the loan. This makes it easier to end up with a loan you cannot afford to repay.

Some lenders charge a daily fee as a late penalty when you default on a payment. These late payments can add up and affect your credit rating, impacting your ability to borrow money in the future.

Pay day lenders also don’t have policies to assist DV survivors like banks do.

A perpetrator can misuse payday loans by illegally taking out an account in your name or forcing you to obtain a payday loan that you knowingly cannot afford. If this occurs, you can seek free legal advice from your community legal centre.

If you find yourself in a situation where you are considering a payday loan, here are some alternative solutions to avoid getting into debt:

  • Talk to your utility service providers to request a payment plan or payment extension
  • If you receive Centrelink payments, request to receive an advance
  • Find out if you are entitled to a Centrelink Crisis Payment
  • Consider a loan through the No Interest Loan Scheme (NILS), in which you pay no interest or fees.

When faced with financial hardship, you can reach out to financial counsellors who can advocate on your behalf.

Talk to a financial counsellor. Find a Community Legal Centre near you. Find out about the No Interest Loan Scheme (NILS)